In recent years, Russia has embarked on an ambitious multi-billion rouble programme to improve and enlarge its road infrastructure network. Roads are by far the most important means of transport in Russia, accounting for nearly 68% of the total volume of freight transported across the country over the year and for over 70% of total passenger traffic.

According to the report “Transport Infrastructure Construction Market in Russia 2013” by PMR, although federal roads account for only 6% of roads in Russia, these are responsible for about 50% of all traffic in the country. However, only 40% of the country’s federal roads meet regulatory compliance requirements. This share is to be increased to as much as 85% by 2020, or about 46,000 km of federal roads are expected to have reached the required standards by that time.

Of the 9,700 km of federal roads planned for Russia by 2020, about 5,100 km is to be Category 1 highways, with nearly 2,300 km of this to be put into use by 2015. An important share of federal roads to be developed across the country in the future will come from the state-owned Highways Company, Avtodor. The company, founded by the government in 2009, was created to develop the country’s federal toll road network, with a strong emphasis on attracting investment through PPP schemes. Avtodor currently operates 2,454 km of federal highways: the M-1 Belarus (449 km), M-3 Ukraine (488 km) and M-4 Don (1,517 km). There are also plans to build nearly 1,900 km of new road stretches by 2019, of which 654 km was under construction in Q4 2012. All of the new routes will operate as toll roads whereas, on existing federal highways, only selected sections will become toll roads (those sections which are being modernised by Avtodor, in terms of additional lanes, quality improvements, etc.). One stipulation is that all toll roads will have to have a toll-free alternative.

The public-private partnerships mechanism is a relatively new concept in Russia, which started to gain ground less than five years ago. There are only a handful PPP projects in the road construction market in Russia. Among these are the construction of the Western High-Speed Diameter road in St. Petersburg, the 15 to 58 kilometre stretch of the Moscow-St. Petersburg expressway, and the relief road for the main section of the M-1 Belarus federal highway, known as the Odintsovo Bypass.

The construction of the 684km expressway linking Moscow and St. Petersburg will be one of the most expensive road projects in Russia in the near future. The first segment (km 15-58, 8-10 lanes) is currently under construction by the North-Western Concession Company (NWCC), comprising Vinci and a Russian partner, N-Trans. Under the concession agreement, signed for a period of thirty-one years, about RUB 64bn ($2.1bn) is to be spent on developing this stretch, of which RUB 41bn ($1.4bn) is to be provided by private investors. The project is being implemented on a Build-Operate-Transfer basis, with the completion of the construction phase expected by end of 2014.

Another representative PPP project in road construction which has been in active development in Russia since 2010 is the construction of a new 18.5-km toll road between the Moscow Ring Road (MKAD) and the M-1 Belarus federal highway, bypassing Odintsovo. The project has a total value of RUB 32.4bn ($1.1bn), of which about RUB 21bn ($713m) is to be provided by the concessioner, OJSC Main Road, with Alpine Bau (Austria), FCC (Spain), Brisa (Portugal), FCC (Spain) among the shareholders, along with the Russian entities Gazprombank, Stroygazconsulting and ZAO Lider.

With regard to concession projects in the pipeline, the Central Ring Road project in Moscow Province is in the pole position for attention from private investors in the next couple of years, when the first, third and fourth segments are expected to be up for tender. Preparation work on the remaining sections of the Moscow-St. Petersburg highway has recently been accelerated.

More information can be found in the report “Transport Infrastructure Construction Market in Russia 2013” by PMR.